Maybe China Can Win the Race to Autonomous Vehicles

Nowadays, the autonomous vehicle has become a rising star in the auto industry. It’s the further of this industry and the area where Silicon Valley is currently focusing on. This wave of enthusiasm is no exception in China.

Alibaba Group Holding Ltd. has been testing its own autonomous vehicle technology and is looking to hire an additional 50 experts on self-driving vehicles. Baidu Inc. conducted open-road tests for its autonomous vehicles in March. Earlier this month, BMW became the first global carmaker to test self-driving vehicles in China. In mid-May, Roadstar.Ai LLC, headquartered in Shenzhen, obtained a record amount of financing from Chinese investors. At the same time, Tencent Holdings Ltd. and Didi Chuxing have said in the last few weeks that they are testing autonomous vehicles in California.

In April, the Chinese government laid out guidelines for testing autonomous vehicles. Chinese cities including Beijing and Shanghai have previously announced local guidelines for self-driving tests. This will enable China to collect a large amount of data on AV testing on public roads.

Anjani Trivedi, Bloomberg Opinion columnist, said, “China’s official entry into the race could address the biggest barrier to the mass production of autonomous cars — cost.” The cost of the technology (and related security tests) is still too high—in fact, it is the biggest obstacle to the widespread use of self-driving vehicles.

For example, the laser-based sensor currently produced by Velodyne Lidar Inc. is a key component of autonomous vehicles, costing between $8,000 and $80,000 and weighing from 1 to 13 kilograms. If these light-emitting radars were mass-produced, they may cost only $1,000.

This is where China can help. Quanergy Systems Inc. is a low-profile Silicon Valley lidars manufacturer that uses lasers to create 360-degree three-dimensional images. Quanergy has partnered with Daimler AG’s Mercedes-Benz, Delphi Technologies Plc and Nissan, which is probably closest to creating the ideal sensor. According to informed sources, Chinese investors may become an important shareholder of the company after the next round of financing. Quanergy has also established a strategic partnership with technology developer Sensata Technologies Plc. Sensata said it has already worked closely with China.

Investors should pay more attention to the fund invested by China in autonomous vehicles industry, whether through subsidizing its domestic technology giants or investing in the capital pool. This fund can make up the financing gap in this industry during the current period. In a difficult situation, a car manufacturer cannot afford it. The amount of capital needed to provide infrastructure for self-driving cars will far exceed the level many governments are willing to commit, with the exception of China.

The autonomous vehicle industry is actually changing every day, and no one knows what kind of advanced technology will be developed next. But in the coming years, technology will improve, costs will drop, and we will begin to better enjoy the convenience brought by self-driving cars.

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